Medicare cuts could imperil Maine’s medical equipment companies

PORTLAND, Maine (MCT) — Maine companies that sell home medical equipment say health insurance changes may force them out of business and could affect the seniors who use their products.

In January, the federal government will begin cutting Medicare reimbursements to so-called durable medical equipment providers, those who sell and service home-use oxygen tanks, wheelchairs and walkers. Although the cuts won’t initially affect Maine, the changes may eventually lead to reduced reimbursements in the state, according to people familiar with the industry.

“We anticipate that the quality of the equipment and the number of services previously provided, such as access to respiratory therapists, will be reduced,” said Karyn Estrella, executive director of the New England Medical Equipment Dealers Association, which represents 25 Maine-based suppliers.

“We see this as a train wreck. It will hit Maine,” said Jim Greatorex, president of Black Bear Medical, an equipment supplier with offices in Portland, Bangor and Greenland, N.H.

The industry says it has suffered from dwindling Medicare reimbursements for a decade, including a 9.5 percent Medicare cut a few years ago and a 50 percent drop in oxygen care reimbursements. Companies also complain of onerous accreditation requirements.

Estrella said companies affected in Maine are mostly small businesses with revenue under $5 million.

“We are seeing a big impact financially. We are struggling,” said Gayle Allen, manager of Machias Home Health.

Another company, Alpha One, which has offices in Portland, left the business after the last round of Medicare cuts.

“It had been going on for a while and it was getting worse. When Medicare made the last cut, we said, ‘That is it,'” said Paul Chamberlain, chief financial officer at Alpha One.

Chamberlain said the decision was also prompted by troubles with MaineCare, which was slow to reimburse. The company still operates a nonprofit arm helping people with disabilities.

Majors Mobility, another equipment supplier, closed its Scarborough store last year. Though the economy played a role, the “kiss of death” was the 9.5 percent Medicare cut, said owner Tyrrell Hunter. Majors still has a store in Topsham.

In January 2011, the Centers for Medicare and Medicaid Services will cut reimbursements on some medical equipment an average of 32 percent as part of a new competitive bidding program. The program is expected to save $28 billion over 10 years and reduce fraud. It will launch in nine cities.

Although Maine isn’t directly affected, business owners fear fallout. They say private insurers, which tend to use Medicare as a benchmark, may drop their reimbursement rates.

“It is not a level playing field. You have some huge providers that can bid a lot more competitively,” said Michael Nadeau, president and CEO of Bedard Medical Equipment & Supplies in Lewiston.

Also, because medical equipment companies deliver products to homes, rural providers are at a disadvantage.

“It costs more in Maine to take care of beneficiaries,” said Estrella. “Boston trucks can make 10 stops per day. But in Maine, they can only make two or three stops.”

Greatorex said the new bidding process will create a “race to the bottom for the lowest quality products” and may lead companies to fail, possibly leaving patients in rural areas without local providers.

But nonprofit groups that work with elderly patients are not overly concerned.

“I don’t think it will have a huge impact. They are trying to bring savings to Medicare,” said Connie Jones, director of community service for SeniorsPlus, a Lewiston-based nonprofit that helps the elderly live independently. “In our area, nobody has complained to us at this point.”

Steve Farnham, executive director of Aroostook Area Agency on Aging, is often astounded at home medical equipment prices.

“If you could see the costs that get passed on to Medicare by durable medical equipment providers, I don’t feel any sympathy. What makes it that expensive?” he asked.

Farnham added, “We haven’t heard anything from consumers. And if consumers are being impacted, we would hear very quick.”